Tapping into international markets is one way to expand your customer base and grow your small business exponentially. However, small businesses face many barriers to exporting including high shipping costs, unfair trade policies by other countries, cultural differences and other challenges.
To help small businesses overcome these obstacles and mitigate the risk of exporting, the federal government provides a wide range of financial support. There are generally four main types of export assistance programs.
Export Development and Working Capital Financing Programs
These enable small businesses to get loans that help grow sales abroad and boost competitiveness in the international marketplace. These include:
The Small Business Administration’s (SBA) Export Express Program
This program offers financing up to $500,000 for business purposes that will enhance a company’s export development such as international trade shows, standby letters of credit and translating product materials.
It is the simplest export loan product offered by the SBA and easily accessible to both borrowers and lenders by allowing participating lenders to use their own forms, procedures and analyses. SBA determines eligibility and provides a loan approval in 36 hours or less.
Export-Import Bank’s Working Capital Guarantee Program
This program provides loan guarantees for financing that can be used to buy finished products, raw materials, equipment supplies and other essentials.
The Small Business Administration’s Export Working Capital Program
This program assists lenders in meeting the needs of exporters seeking short-term export working capital. The EWCP loan is designed to provide necessary financing to support an exporter’s transactions, from purchase order to final payment, with a $5 million maximum loan amount and 90 percent guaranty.
Facilities Development Financing Programs
This includes the SBA’s International Trade Loan Program which is designed to help small businesses enter and expand into international markets or, when adversely affected by import competition, to make the investments necessary to better compete.
The allowable size for the loan was increased to $5 million and it offers a combination of fixed asset, working capital financing and debt refinancing with the SBA’s maximum guaranty of 90 percent.
International Buyer Programs
These programs help small businesses assist international buyers in finding financing to purchase American goods when there are no other financing options available or if interest rates are too steep. These programs from the Export-Import Bank include:
Medium and Long-Term Loan Guarantee Program
Provides term financing to creditworthy international buyers in the private and public sector for up to 10 years.
Direct Loan Program
Provides fixed-rate financing for up to 12 years in general and up to 18 years for renewable energy projects.
Finance Lease Guarantee Program
Provides competitive medium-term financing structured as finance leases.
The Department of Agriculture’s Export Credit Guarantee Program encourages financing of commercial exports of American agricultural products while providing competitive credit terms to buyers.
Investment Project Financing Programs
Includes the Overseas Private Investment Corporation, which provides funding through direct loans and loan guaranties to eligible projects in developing countries and emerging markets.
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